Shares of Germany-based Trivago NV (ADR) (TRVG -0.97%) jumped 22% in early-morning trading today after the travel company posted better-than-expected first-quarter earnings.
For the first quarter, Trivago's sales grew 68% year over year to 267.7 million euros ($293.9 million as of today's conversion rates). Earnings for the quarter swung from a small loss in the prior-year period to a positive net income of 7.7 million euros ($8.5 million). The growth in sales and earnings came from both an increase in travelers using Trivago's platform, as well as paid subscriptions for Trivago's Hotel Manager Pro service, which helps hoteliers get more clicks on their listings. Trivago CFO Axel Hefer said this during the release:
The improvements in profitability were principally driven by the scaling of the business and our continuous improvements of our technology and algorithms, which we expect to continue to benefit from in the future. We are on track to deliver continued growth in revenue and profit in line with our guidance.
Shares of Trivago already surged two weeks ago when its largest shareholder, Expedia (EXPE -1.07%), which owns more than 60% of the company, reported its own first-quarter results that were ahead of expectations. Trivago upped its full-year guidance to 50% sales growth over 2016 that day, sending shares higher. Today's positive results also beat expectations, and the company reconfirmed that 2017 guidance.
Since going public last December at $11 per share, Trivago stock is now up around 97%. Trivago is operating in an increasingly crowded market, not only alongside its main investor, Expedia, but with many other larger companies looking to gain fees as online travel agents. Still, Trivago has clearly proven its ability to carve out a niche in this space, and that is proving profitable.